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Rupiah, stocks, bonds continue gain this week
Indonesian financial assets continue to gain for the second week after the local statistics agency announced a lower inflation rate and an unexpectedly large trade surplus earlier this week
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ndonesian financial assets continue to gain for the second week after the local statistics agency announced a lower inflation rate and an unexpectedly large trade surplus earlier this week.
The rupiah strengthened 0.4 percent this week to Rp 11,317 per US dollar on Friday, according to prices from local banks.
Indonesia's benchmark stock index, the Jakarta Composite Index (JCI), gained 1.7 percent this week to 4,857 on Friday's close. The index nearly touched its highest level in 10 months of 4,891 on Thursday.
'The strengthening of the JCI is apparently influenced by positive data released earlier this week,' Kresna Securities wrote in a research note distributed on Friday.
Indonesia recorded a trade surplus of US$785 million, exceeding expectations. The country's consumer price index (CPI) slowed to 7.32 percent in March from 7.75 percent in February.
'Inflation could fall below 7 percent this year, followed by yields, if the many uncertainties along the way, such as elections, run smoothly,' said Fahrudin Haris Prastowo, a fixed-income dealer at PT Bank Rakyat Indonesia (BRI), as quoted by Bloomberg. Indonesia will hold a legislative election on April 9, followed by a presidential election on July 9.
The yield on the benchmark government's 10-year bonds fell 12 basis points from a week ago to 7.88 percent, the biggest drop since last month, data from the Inter Dealer Market Association shows. Lower yields mean higher prices.
Foreign investors pumped Rp 1.2 trillion ($106 million) into the local currency sovereign debt market on April 1 and 2, pushing up inflows to the market to a total of Rp 38.06 trillion so far this year.
On the stock market, global funds have added Rp 28.62 trillion from the beginning of this year to Friday.
Bahana Securities research head Harry Su considered Indonesia's stock market as no longer cheap because of its average price-to-earnings ratio of 17.4 times, compared with a forecast of 18.3 times for 2014.
'We think investors will have to go back to the fundamentals and pay closer attention to growth rather than sentiment. We expect stocks and sectors to be more sensitive to earnings surprises,' Harry said, as quoted by Reuters.
The country's stock index has gained 13.66 percent so far this year, outperforming major indexes in the region.
Singapore's stock index has gained 1.43 percent, Thailand's 7.18 percent, the Philippines' 11.4 percent and India's 5.53 percent. Other indexes have suffered losses throughout 2014 of 1.16 percent for South Korea, 0.55 percent for Malaysia, 7.53 percent for Japan, 3.42 percent for Hong Kong and 2.7 percent for China.
On Friday, 6.07 billion shares worth Rp 5.42 trillion were traded on Indonesia's local bourse, lower than the daily average of Rp 6 trillion.
The index dropped 0.6 percent during the day as investors remained on the sidelines following this week's strengthening streak.
Shares that have driven the stock index up this year led to losses on Friday, including those of consumer goods giant PT Unilever Indonesia (UNVR), top cigarette maker PT Gudang Garam (GGRM), as well as major banks PT Bank Mandiri (BMRI), BRI, PT Bank Central Asia (BBCA) and PT Bank Negara Indonesia (BBNI).
